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Freshfields Bruckhaus Deringer has dramatically increased the salary of newly qualified lawyers to £150,000, in the latest sign of a battle for legal talent in the City of London.
The “magic circle” law firm, which turned over £1.8bn in its most recent financial year, said on Friday it had increased the base salary of new lawyers by 20 per cent from May 1. The move means the salaries of its younger lawyers have increased. increased 50 percent in the last five years.
The rise is the latest salvo in a pay war between the UK’s elite law firms and their deep-pocketed US rivals, which has led to a spike in salaries for both junior and senior lawyers.
This comes as US-based firms have bolstered their presence in London over the past decade, including poaching partners from UK rivals with multi-million pound pay packages.
The trend has lifted salaries for newly qualified lawyers at top US law firms in London, including Latham & Watkins, to around $225,000. David Polk pays its junior lawyers £170,000.
Recruiters said Freshfields’ move could lead to pay rises among the company’s “magic circle” peers. Linklaters, Clifford Chance, A&O Shearman and Slaughter and May currently pay newly qualified solicitors in London £125,000, and Linklaters and A&O Shearman last increased salaries for junior solicitors in 2023.
“Freshfields has thrown down the gauntlet on junior salaries once again in a sign that pay wars in the City may be heating up,” said Chris Clark, director of London-based recruitment firm Definitum Search. “U.S. companies will undoubtedly raise the bar again, seeking to maintain at least a 40 percent gap” with their U.K. rivals.
Clifford Chance will review their pay packages in the summer, while Slaughter and May will not do so until November, according to the companies. Linklaters declined to comment. A&O confirmed his current compensation but did not respond to questions about whether it was reviewing the pay.
Clark also predicted that raises could come for more qualified associates in response to the narrowing pay gap.
Freshfields increase arrives despite a slowdown in work for city law firms as deals have slowed and magic circle profits stagnated last year. Elite companies, including Freshfields, have also been trying to gain a greater presence in the US market. The firm’s first-year associates in its U.S. offices receive a salary of $225,000, according to a person with knowledge of the situation.
The move comes after rival Allen & Overy this week completed its merger with New York-based Shearman & Sterling, with the expanded firm renamed A&O Shearman.
Freshfields has also increased salaries in London for first-year apprentices from £50,000 to £56,000 and for second-year apprentices from £55,000 to £61,000.